Fonterra partner Beingmate plans to sell off dairy farms as it forecasts big loss
Fonterra's Chinese investment partner Beingmate has forecast a hefty loss of $70 million for the first six months of the year and announced a sell-off of dairy farm assets.
The company had earlier forecast a profit. Its shares have fallen 10 per cent and been indefinitely suspended from trading, and charges have been made the company has been involved in insider trading.
In 2015 Fonterra invested $700 million for an 18.8 per cent stake in Beingmate, which it said would give access to the lucrative Chinese market for its infant formula and other products.
Dr Andrew Zhu of Trace, a consumer research company based in Auckland, said he believed the investment was questionable.
"There's a big mismatch between Fonterra and Beingmate. The key thing is the Chinese consumer doesn't have confidence in this brand."
"In May I went to China to do a study on infant formula and no-one mentioned it. For people in the first and second tier cities, it's not a brand they consider. It's aimed at the lower end of the market," Zhu said.
Fonterra acknowledged the difficulties of the Chinese infant formula market. A spokesman said the infant formula industry continued to operate "under challenging conditions" during the transition to infant formula registration, which had taken longer than indicated at first.
Beingmate was operating in a highly fragmented and uncertain infant formula market. Registrations for its five factories were "all on track".
"Our investment in Beingmate is part of a long-term, strategic plan to grow in the China infant formula market. We remain committed to the integrated China strategy and will continue to build on the success of our business in China," the spokesman said.
He said the partnership had created a direct line from Fonterra into the China infant formula market and given it access to an "extensive distribution and sales network".
"As a result our Anmum range is now in more than 170 cities in China, compared to around 60 in 2015."
Zhu said that just because the product was available in a greater range of cities, it was not necessarily value added.
Labour primary industries spokesman Damien O'Connor said senior Fonterra executive should be held responsible.
"The board approved a wasted investment of $700m of New Zealand farmer money. There's no excuse for not doing due diligence," he said.
Beingmate is not alone in experiencing difficulties in China. Last month Chinese authorities suspended the export licence of Australian dairy company Bellamys.
Fonterra manufactures Bellamy's organic baby powder range at its Darnum, Victoria plant under a five-year, multi-million deal, but the suspension does not impact the sale of these products.
Fonterra Australia also uses the Darnum plant to manufacture nutritional base powders for Beingmate, which are now being shipped to China.
Last week Beingmate told the Shenzhen Stock Exchange it would spin off a subsidiary that runs dairy farms in China's Heilongjiang province to improve earnings.
The subsidiary - Beingmate Anda Dairy Company - has lost money in the last year as global raw milk prices remained low, although they have since picked up.
The Caixin news website said Beingmate chairman Wang Zhentai had denied the claims of insider trading, but the Shenzhen Stock Exchange had ordered the company to disclose any stock transactions made by executives over the past three months.
In the last year the vice-chairman, chief financial officer and deputy general manager have resigned from Beingmate.
Source: NZFarmer. Date: 2017-08-07
U.S. Beef Is Back on China's Shelves—But China Doesn't Care
At the Sam’s Club store in Beijing’s Shijingshan district, the chilled beef on offer is so dominated by Australian cuts -- marbled rib eye steaks to fatty oxtail chunks -- that many customers are oblivious to the few packs of U.S. meat available.
“I haven’t noticed the U.S. beef here,” said Hui Xue, who was shopping for steaks that he cooks once a week. Even if he had spotted the produce, it probably wouldn’t have gone into his cart. The American meat -- back in China after 14 years as part of a trade deal hailed by the Donald Trump administration -- was only available in little strips meant to be stir-fried rather than in larger hunks that can be sizzled on a cast-iron skillet.
Viveca Zhang, another shopper at the store, also bypassed the American supply. “I would like to try the U.S. beef, but there are only a few options to choose from,” she said.
Their reticence emphasizes the barriers that U.S. beef faces on its reentry into the world’s second-biggest consumer after being barred in 2003 due to concerns over mad cow disease. While the return prompted fanfare from the Trump administration and promises that shiploads of meat would start arriving at China’s shores, producers may have to endure a long slog back into the market. That’s because rivals from nations including Australia and Brazil rushed in to dominate sales when the Americans were shut out.
“Trade will grow gradually, but I don’t think it will increase to the extent that would affect China’s beef market, because of its limited supply,” Chenjun Pan, an analyst at Rabobank International, said of the U.S. meat.
China, the world’s largest pork producer and consumer, has seen beef demand climb as incomes increase, prompting people to spend on new and varied types of food. Imports are predicted to climb to 950,000 metric tons this year from 26,000 tons in 2003, according to the U.S. Department of Agriculture.
The amount of American supplies entering China currently is relatively small because “the U.S. produces beef differently from other countries like Australia and Brazil, which do not use some feed additives that are banned by the Chinese government,” said Rabobank’s Pan.
That sentiment is in sharp contrast to the unbridled optimism expressed by U.S. officials and industry representatives at a ceremony in Beijing on June 30 celebrating the return of U.S. beef.
“Beef is a big deal in China and I’m convinced that when the Chinese people get a taste of U.S. beef, they’re going to want more of it,” Sonny Perdue, U.S. Secretary of Agriculture, said while promoting the bilateral deal in Beijing. “These products coming into China are safe, wholesome and very delicious.”
President Trump even re-tweeted a story last month to express his enthusiasm: “After 14 years, U.S. beef hits Chinese market. Trade deal an exciting opportunity for agriculture.”
China banned U.S. beef exports in December 2003 after a cow in Washington state tested positive for mad cow disease. According to the U.S. Department of Agriculture, the diagnosed dairy cow had been imported from Canada.
There won’t be a “significant amount” of U.S. beef entering the Chinese market in the near term, according to Jake Parker, vice president at the U.S.-China Business Council in Beijing. The American product still faces strict Chinese government rules, with the beef that does qualify being priced for the premium market, he said.
Limited Volumes
“Current volumes are limited due to export requirements,” Caroline Ahn, a spokeswoman for U.S. meat giant Tyson Foods Inc., said in an email. “Any increase in demand from China is great news for our business, as well as the independent cattle producers who supply us.”
Out of 600,000 head of cattle slaughtered in the U.S. each week, only about 1,600 can meet Chinese specifications, said Zhifeng Cai, a manager at the fresh produce department of Womai.com, the online retail platform of China’s state-owned food giant Cofco Corp., which first imported American beef into the country.
U.S. Secretary of Agriculture Sonny Perdue meets Chinese counterpart Han Changfu in Beijing on June 30.Photographer: Jason Lee/AFP via Getty Images
Part of Cofco’s first batch of American beef was offered on Womai.com and sold out within two days, said Yun Yuan, public relations manager for the site, without providing details on the volume that was sold. Of the more than 50 items currently offered on the website’s imported beef section, less than 5 were from the U.S.
Sam’s Club, a membership store operated by Wal-Mart Stores Inc., sold its first U.S. beef in China in late June. However, the retailing giant doesn’t have immediate plans to sell American beef at its less-expensive Supercenters, Wendy Li, a spokeswoman for Walmart China, said in an email.
Chilled, Frozen
China’s imported beef market is divided into chilled and frozen beef. Brazil, Uruguay and Australia account for more than half of the less-expensive frozen beef market, Chinese customs data show. For premium chilled beef, the biggest competition for U.S. meat is from Australia, from which the Asian nation imported 6,833 tons of the variety last year, the data show. Inbound volumes including frozen beef from Australia were 110,758 tons.
China imported a total of 11.1 tons of chilled and frozen beef combined from the U.S. in June, compared with shipments totaling 9,502 tons from Australia, according to the customs data.
Coleen Feng, another shopper at Sam’s Club who also ignored the American meat on offer, said eating Australian beef “has become a habit.”
Source: Bloomberg. Date: 2017-08-04
China's taste for US pistachios pumps up California's exports
When Judy Hirigoyen travels to China on business, she is "delighted and shocked" to see bowls of California pistachios on the tables of tea houses in Chengdu.
Hirigoyen, the vice-president of global marketing for the American Pistachio Growers (APG), a trade association in Fresno, California, proudly represents the booming US pistachio industry.
Just a year ago, the industry was hampered by a lack of favorable "chill hours" in California (temperatures below 40 degrees), along with a West Coast port strike.
With better weather conditions and a settled strike, the US pistachio industry is booming.
As acreage grew across the West - almost 250,000 acres in California alone - pistachio nut production in 2016 rose to a record 903 million pounds, a year removed from crop failure and almost double the yields from 2010 through 2014.
And China is gobbling up a good chunk of those green nuts, consuming about half of total US pistachio exports so far this year. Year-to-date exports are near a record at more than 350 million pounds, said Richard Matoian, executive director of APG.
The pistachio nut, a member of the cashew family, is grown on a small tree originating in Central Asia and the Middle East. The word pistachio comes from medieval Italian.
Pistachio trees typically alternate each year in their output levels.
"Every other year, the plant pushes out its fruit. After it pushes out so much fruit, it has to take a whole year to get its energy back," Hirigoyen told China Daily. "This is an alternating crop."
So while this would technically be a slower year, "we could have over 600 million pounds (this growing season). It would still be bigger than many of our past years," she said. "There are so many acres that have been planted."
As a drought-tolerant crop, pistachios can survive on little water, which was the situation during California's drought in 2015.
The Golden State is the pistachio kingpin, accounting for 99 percent of US production. Pistachios also are grown in Arizona and New Mexico.
A key selling point for US pistachios, aside from California's "health halo", as Hirigoyen joked, is their safe harvesting method.
"They want safe food," in China, she said.
"In the United States, when pistachios are harvested, they're harvested by shaking the tree," she explained. "This machine attaches to the trunk of the tree and shakes it, and it shakes the nuts into this big catcher, and then they go from that catcher directly into the truck to the roasting facility, so they never touch the ground. The ground is where you see most any contamination in nature."
There are health benefits, too. Pistachios have a low glycemic index, are high in fiber, healthy fats, antioxidants and anti-inflammatory phytonutrients.
Interim results of a spring study (co-funded by APG and the US Department of Agriculture) in China among pregnant women with gestational diabetes showed that eating pistachios resulted in a significantly lower rise in blood sugar levels than when they ate whole wheat bread.
Data from the study were presented at the 10th Oriental Congress of Endocrinology and Diabetes in April in Shanghai and at the Chinese Nutrition Annual Conference in May in Beijing.
"Our study is the first to show that eating pistachios may help women with gestational diabetes control blood sugar levels after eating," said Dr Ge Sheng, lead investigator and director, Department of Clinical Nutrition, Sixth People's Hospital, Jiao Tong University.
Twenty-five pregnant women with gestational diabetes ate a breakfast of either 42 grams of pistachios (one third of a cup) or 100 grams of whole wheat bread (three slices) after an overnight fast.
Blood sugar levels were significantly lower after they consumed pistachios than the bread.
"Elevated blood sugar during pregnancy not only impacts the mother's health, but it may also increase the baby's risk of developing diabetes," said Dr Zhaoping Li, study investigator and professor of medicine, chief of the Division of Clinical Nutrition at UCLA.
Source: China Daily. Date: 2017-08-04
CHINA’S FOREIGN FOOD & AG ACQUISITIONS SET TO INCREASE
After a series of high-profile acquisitions and more likely on the way, China is poised to have a much larger footprint in the global food supply chain in the near future, according to a new report from Rabobank. The report highlights six acquisitions from the last six years that demonstrate China’s agricultural priorities and perhaps predict the role the world’s most populous country is seeking on the global agriculture stage.
The sense of urgency around feeding China’s 1.4 billion people has been leading to deals both private and public for the last several years. In April, Alex Zhang, cofounder and management partner of Beijing Hosen Investment Management (Hosen Capital), who has invested $300 million in food and agribusiness-related companies that are either located in China or are directly involved in meeting Chinese demand, told AgFunderNews, “The whole industry is modernizing at a speed we haven’t seen in Chinese food industry history, and if we follow a similar pattern in the way the U.S. food industry evolved in the past, we are now at the stage that we will see more and more sector consolidation. We will see more trade sales and large Chinese food companies will continue to go global,” said Zhang. “Our food industry will evolve in a similar fashion to our internet industry where four of the world’s top 10 companies are Chinese; we will probably see something similar in 10 years’ time in the food industry.”
The Rabobank report posits that China’s acquisitions are not simply meant to give the country more global superiority in terms of food production and ag-related holdings, but also to meet specific goals within the nation’s own food supply.
RAMPING UP EFFICIENCY
According to the report, China’s crop yields have a way to go. Yields for corn, soybeans, and wheat in China are growing at a slower rate than producers globally. For example, the report forecasts that Chinese corn production will reach 6.37 tonnes per hectare by 2026 while the U.S. will reach 10 tonnes per hectare.
The report names ChemChina’s acquisition of Syngenta as a leading sign of this focus. In China’s largest foreign takeover to date, ChemChina announced the intended buyout of Syngenta, with the blessing of shareholders, in February 2016 and finished obtaining 98% of the company just this month, in a deal totaling $43 billion. A few more legal hurdles remain such as canceling the remaining 2% in stock and delisting the company from the Swiss Exchange, but the massive takeover is essentially done.
“The combination of ChemChina’s acquisition of Syngenta’s seeds and agrochemical assets, and China’s own germplasm base, traits, and related technology makes for an excellent foundation to achieve this goal,” said the report.
The most recent major agricultural acquisition by a Chinese company further supports the goal of upping yields. In July, CITIC Agri Fund purchased Dow’s Brazilian corn seed operation including seed processing plants and research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank, the Morgan seed brand, and a temporary license for the use of the Dow seed.
SOLID SOURCE OF FEED
In addition to souping up China’s commodity production, the country is looking to support another key part of its domestic food supply; China may be able to meet the majority of its demand for meat through domestic production, but its animal feed is largely imported.
As in most developing nations, meat consumption is up, and this relies on a feed crop that China is not quite as skilled at producing: soybeans. The government has expressed a desire to increase soybean acreage by more than 30% by 2026, and several acquisitions have made this appear more likely.
The report details three of these: COFCO’s acquisition of Noble Agri, a Singaporean supplier of agricultural and energy products, and Nidera, a Dutch grain trader, both with an eye toward trading. Also major Chinese meat processor Shuanghui purchased U.S. pork giant Smithfield in 2013 — along with 146,000 acres of U.S. farmland — for $4.7 billion, which the report argues is to further supplement animal protein supply.
The report further says that future investments will likely focus on “technology that improves livestock productivity.”
ARBITRAGE
The report also gives a nod to China’s amassed capability for arbitrage — buying and selling products at the same time to turn a profit. Not only may China be able to secure its domestic food production through these acquisitions, but it may also be in a position to play a global role in the pricing and supply of agricultural products and inputs.
Plus, through the sheer force of its power as an importer, logistics and even food safety are also at the country’s fingertips. Case in point: After the Trump administration successfully convinced China to lift the ban on beef imports from the U.S., it has become clear that Chinese restrictions on common cattle feed additives will either require a costly conversion by U.S. ranchers or keep the U.S.-China beef trade in niche territory. The U.S. poultry industry is currently seeking the same opportunity.
Source: Ag Funder. Date; 2017-08-04
Latent risks as Aussie meat beefs up VN market share
As the demand for imported beef soars, Australian exporters are strengthening their market share in Vietnam, but the situation is fraught with risk, experts say.
A Dau tu (Investment Review) newspaper report says Vietnam has become one of the largest importers of Australian cattle. In 2016, it ranked fourth among 32 countries importing Australian cattle.
The report quoted Tong Xuan Chinh, deputy head of the Ministry of Agriculture and Rural Development’s Animal Husbandry Department, as saying Vietnam began importing Australian cattle in 2010.
In 2012, the country had just four enterprises importing Australian cows but by 2015, the number had risen to several dozen with a total of 360,000 heads of cattle imported.
Vietnamese businesses are now rushing to import Australian cows and fattening them for sale to slaughterhouses. As a result, inventories of live cattle have swelled significantly.
The inventory of Australian live cattle in 2015 was estimated at 100,000 heads due to oversupply, Chinh told Dau tu, adding that in 2016, imports of cattle from Australia to Vietnam slowed dramatically as feedlot operators moved to lower their inventories.
Before 2010, Australian cattle exporters were not aware of the attractive Vietnamese market. Their main partner at the time was Indonesia, importing nearly 1 million cows from Australia per year, said Luong Minh Tung, Chairman of Yen Phu Beef and Dairy Cattle Breeding JSC in Ninh Binh province.
In 2011, the Australian government issued a ban on cow exports to Indonesia after reports surfaced about inhumane slaughter in some of its abattoirs, Tung said, adding that Australia also lost their strategic partner after the decision.
This was the context that Australian businesses, urgently looking for new partners, found Vietnamese ones, Tung said.
The import of Australian cattle for fattening had been expected to open up a new direction for the fed-cattle industry. However, Tung said, there were always latent risks in imports.
He said there were too many businesses involved in importing Australian cattle, which could lead to supply exceeding demand.
Instead of importing culled beef of large weights, Vietnamese firms preferred to import calves in order to fatten and sell to slaughterhouses, which offers greater profits, Tung said.
However, as Vietnam didn’t have favorable conditions like Australia to breed cows, local importers have to invest a lot in infrastructure to support the influx of Australian cattle, meeting strict importing-related requirements.
According to Hoang Dung, Director of the Hai Phong Investment and Animal Poultry Products Import Export JSC., or Animex Haiphong, Australia requires all slaughterhouses in importing countries to have modern equipment and comply with ECAS (exporter supply chain assurance system) needs.
Businesses whose abattoirs are not in line with ECAS will be banned from purchasing Australian cows.
Such bans could cause huge losses to many Vietnamese slaughterhouses, Dung said, adding that although there were thousands of standard slaughterhouses, only 100 units or so had been approved by the Australian side.
Dung also said many small and medium-scale cattle breeders were facing severe competition from large rivals, like the Hoang Anh Gia Lai Agriculture International JSC (HNG), which has poured trillions of dong into importing Australian cattle to Vietnam for fattening and selling.
"Small businesses usually import several thousand heads of cattle each time and will purchase more only after they have already sold them out. Meanwhile, HNG buys 30,000 to 40,000 heads of cattle each time," Dung said.
The Da utu report said that at the end of 2016, the Viet Eco Farm JSC. launched a beef store chain called “Healthy beef” in Can Tho city, providing fresh, high quality Australian beef products in large quantities.
In the short term, the company aims to supply beef for the Mekong Delta region, but plans to expand its market in other parts of the country, establishing new distribution channels.
Viet Eco Farm also imports Australian calves to fatten and sells mature cows to abattoirs at thousands of heads per time. The company has invested a lot in breeding facilities and modern slaughter lines, and set up 450ha of pasture land to raise cattle.
Chairman of the Vietnam Livestock Association Nguyen Dang Quang said the amount of imported Australian cattle was increasing rapidly, being sold at reasonable prices, enjoying preferential tariffs and becoming more popular with Vietnamese consumers.
Australian beef is "dominating” the Vietnamese market, Quang said, adding that the more fierce rivalry between Vietnamese firms, the more benefits Australia exporters could enjoy.
Quang said it is imperative the country imposes technical barriers on Australian beef so as to protect the domestic cattle industry.
Source: VNA. Date: 2017-08-03
Australian Grains Industry Conference: Be wary of China reforms
Australian grain exporters will need to be wary of new disease and import standards in China as its Government starts to implement a range of revolutionary food safety and agriculture policy reforms.
That’s according to Beijing-based Chinese policy specialist Erlend Ek who spoke at yesterday’s Australian Grains Industry Conference in Melbourne.
Mr Ek, who is a researcher for China Policy, said Chinese media reported last month a shipment of Australian grain was stopped at a Chinese port due to new ergot standards which came into effect at the end of June.
Ergot is caused by a fungus, which besides reducing yields, can also be toxic to animals and humans.
Exports generally have a maximum tolerance level for any shipments which might harbour the ergot fungus.
Mr Ek said the Chinese government’s policy on food production was moving from being self sufficient to a more market-based approach where food quality and environmental concerns have become a priority.
“They are heading toward quality; they want to be seen as a quality producer,” Mr Ek said.
Mr Ek said as a result of the “massive changes” happening with food and agriculture policy in China, hundreds of new standards have been updated.
“They have just revised 6000 national standards for food,” he said.
“The ergot issue comes as a result of this.
“It was released 23 June and on 5 July there were reports that Australian ships were stopped (as a result of this standard).”
However sources have told The Weekly Times they were not aware of a shipment being stopped, and no Australian authorities had been told about an ergot issue with a grain shipment.
But they acknowledged ergot might be an issue in the future.
Other Chinese government changes includes the winding back of subsidies and price supports for local farmers, because price levels were well above global prices, Mr Ek said.
“Support and subsidy system is reaching its ceiling in its (World Trade Organisation) commitment moving away from market distortion and price support,” he said.
This was designed to make farmers more professional, and drive efficiency through the industry.
“China is at a critical stage of a transition from planned economy … toward a modern agriculture industry.
“(The government is saying) let’s make farming professional and more of an industry, and we need to allow other sectors to invest in agriculture.”
This will involve changing the current collective ownership structure of agricultural land, to allow companies and individuals to trade in the collective ownership of land.
This was expected to be confirmed at the Chinese government annual congress later this year.
However he said there was still opportunities for Australian agriculture these included providing grain exports, but quality standards would need to be met.
“Chinese production will hit 600 million tonnes by 2020, but and demand is expected to hit 700 million so they will need imports to make up (the difference,)” Mr Ek said.
“They imported about 105 million tonnes last year, and this year (imports) will hit 120 million tonnes, most of this is soybeans.”
Source: Weekly Times. Date: 2017-08-03
A winning formula? China invests in Canadian dairy to help feed its baby boom
Donald Trump called Canada's supply-managed dairy sector a "disgrace."
Indeed, Canada's strict system of production quotas, import restrictions and price and quality controls is a perennial target for free traders.
But guess who likes it? The biggest market Canada is wooing right now: China.
Supply management is a big reason why a Chinese corporation is investing an unprecedented $225 million in eastern Ontario. Feihe International, Inc. wants cows. Goats, too. Lots of them.
That's because as China's one-child policy phases out, it's going to need a lot of baby formula.
"It's one of the largest economic development projects in our city's history," said Kingston, Ont., mayor Bryan Paterson, calling Canada's largest-ever foreign investment in agri-food "off the charts."
"It might be out of the ordinary, but I think that's what was most exciting."
Feihe International Inc.'s future baby formula plant is now under construction on a 40-acre site in Kingston, Ont.'s Cataraqui Estates Business Park. (Feihe International Inc.)
The first concrete trucks are already pouring at the future site of a 28,000-square-metre infant formula plant. When the state-of-the-art facility opens in 2019, it will employ over 200 people in manufacturing and research jobs. Over a thousand more could come from its construction and eventual supply chains.
A small team of Chinese managers have moved to Kingston. Everyone else will be local.
Last winter, Feihe brought the mayor and a delegation from Kingston over to northeastern China for a tour of its factories and farms. Paterson was struck by how geographically similar it was to eastern Ontario.
With one big difference: scale.
A "typical rural village" they visited was three times the size of Kingston, he said.
"When you have millions and millions of babies, you need to be able to manufacture a lot of infant baby formula."
Bringing formula production back
Canada hasn't made its own baby formula for years. The Canadian Dairy Commission tried for a couple of years to find a domestic processor. Demand for butter was up, and baby formula uses the non-butterfat part of milk. But no Canadian processors were interested in expanding into formula.
The CDC broadened its search internationally, to European and Asian companies.
In Feihe, the CDC found its fit: a manufacturer with over 50 years of experience and keen to expand to North America.
Promotional materials describe Feihe as the top domestic manufacturer of cow's milk formula in China in 2016, with brands in over 100,000 retail outlets across that country — mostly in medium-sized cities where urbanization is expanding and the number of middle-class consumers is rising fast.
Business proposals obtained by CBC News under the Access to Information Act anticipate strong growth for China's formula market. Only one in four Chinese mothers breastfeed exclusively for their baby's first six months. The gradual phase-out of China's one-child policy is poised to spark a baby boom.
Delegations from Kingston, including this group seen last winter at Feihe International's Beijing head office, have been visiting China to discuss not only the new baby formula plant but future manufacturing and research projects. (Office of Mayor Bryan Paterson)
Roughly 85 per cent of the powdered formula made in Kingston could be shipped back to China.
But that's an awfully long boat ride. Why come all the way to Canada for milk?
Quality concerns
It's all about reputation.
In 2008, Chinese dairy products such as baby formula were discovered tainted with melamine. Hundreds of thousands became sick, and at least six children died. Since then, many Chinese distrust domestic milk and prefer foreign brands.
The world's top dairy producers have eyed China for years. But New Zealand's dominant dairy cooperative was a minority shareholder in Sanlu, the company at the heart of the melamine scandal.
Sagging global prices for milk are now forcing farms around the world out of business. Not so in Canada.
"I know that might sound silly for some people, but this is a good side of supply management," said Canadian Dairy Commission spokesperson Chantal Paul. "[The Chinese] know that they're going to have their supply."
Canada enjoys a lot of goodwill right now, and Justing Trudeau has a relatively high profile in China.
"New Zealand doesn't have [Norman] Bethune," quipped Carey Bidtnes from the Kingston Economic Development Corporation, a reference to the Canadian doctor who became famous in China in the late '30s.
Not enough goats
Feihe plans two production lines in Kingston, starting in 2019: one mixing and drying formula from cow's milk, a second with goat's milk.
Canada's marketing boards make supplying the cow's milk straightforward — demand in Eastern Canada's pool is expected to rise by about one per cent.
Supplying enough goat's milk is another story. But there's no supply management for goats. You could milk every one in Ontario and it still wouldn't fill Feihe's order.
Ontario's goat industry produces about 52 million litres annually. But that milk is already spoken for.
If Feihe wants 75 million litres, the industry must double or triple its size. In the short term, goat milk may be trucked in from Quebec or the U.S. Over time, Feihe wants to build up a local industry.
'Lots would love to expand'
It all spells opportunity for anyone frustrated by how expensive it is to get into the cattle business — milk goats instead.
That's Andy Jackson's strategy.
The young farmer from Winchester, Ont., said Ontario's goat industry today is where the cattle business was three or four decades ago. It needs to improve breeding and nutrition to boost production.
Surveying a converted barn full of Saanen and Nubian goats — milking breeds popular in Europe — Jackson described how he's reducing kid mortality and improving the quality of his milk.
Some Chinese investment has flopped, he knows. But his research suggests Feihe isn't a fly-by-night company.
"Hey, at the end of the day, whoever buys the product," he said.
He and his partner used to joke about wanting to expand from 300 to more than 2,000 goats within five years.
"With this plant coming into effect, that'll make that joke actually be able to happen," he said.
Source: CBC News. Date: 2017-08-03
Processing ban: China meat trade in limbo
Multi-million dollar exports of chilled and frozen beef and sheep meat to China still remain in limbo, a week after Chinese authorities slapped bans in six processing plants in Australia.
Temporary suspensions were made on exports from JBS’s Toowoomba and Scone plants, Thomas Food International’s facility at Murray Bridge in South Australia and Northern Co-operative Meat Company’s Casino processor, as well as plants run by Kilcoy Pastoral and Australian Country Choice in Queensland.
The Australian Meat Industry Council said the bans related to “labelling and trade description” of meat products.
AMIC chief executive officer Pat Hutchinson said China took product labelling issues very seriously as part of its food security.
“There are times when there are labelling issues, whether machine or human (error) or both,” he said. “China has said these occurrences have not met its satisfaction.”
AMIC said China was an important meat export market for Australia, shipping 160,000 tonnes of beef and sheep meat valued at about $970 million in 2015-16.
The suspensions related only to meat products loaded on ships from July 24.
Mr Hutchinson said it was not known how many tonnes of product shipped after this time were affected but it was most likely “small amounts”.
He said processors would have to find new buyers for product no longer going to China until the labelling issue was resolved.
Trade Minister Steve Ciobo said it was “a very significant situation” and the Government had “mobilised quickly” to engage Chinese authorities on the issue.
“We have tens of millions (of dollars) in trade affected — it could even be more than $100 million,” Mr Ciobo said.
One meat processor said the issue centred on “equivalence”, a clause in a trade agreement which allowed countries to agree their different technical regulations will achieve the same outcomes, to eliminate dubious trade barriers. The China-Australia Free Trade Agreement came into force in December 2015.
The processor claimed ChAFTA did not have an equivalence clause, complicating resolution of the issue.
“It is a minor hiccup ... if this happened in the US, the issue would be able to be corrected with the exporter without any trading halts,” the processor said.
Source: The Weekly Times. Date: 2017-08-02
Hi-tech agriculture: a solution and a challenge
Vietnam has become known for its remarkable feat in becoming an agricultural powerhouse in a relatively short time, but it seems that the benefits accrued to farmers are not commensurate with the country’s comparative advantages and efforts.
Far reaching agricultural reforms over the past 30 years have provided farmers with ‘catalysts’ and motives to produce and earn their living in a market-driven, open economy, becoming self-reliant in the process.
These reforms have enabled significant achievements in export, food security and poverty reduction. However, recent studies have shown that agricultural growth has been slowing down and that added value created in the sector as well as benefits to farmers do not match the efforts made.
About 24 million workers, i.e. 25 per cent of the country’s population or about 45 percent of the country’s labour force, are engaged in agricultural production, but the sector has only contributed roughly 17 per cent of the nation’s gross domestic product (GDP) and this has been decreasing for many years now.
The number of agricultural businesses makes up less than 1 per cent of total businesses in Việt Nam (4,000 out of 420,000 businesses nationwide). Loans provided to agricultural businesses also account for just 10 per cent of total outstanding loans in the banking system. These figures show agriculture has become significantly less attractive for investment.
While the gap between the current status of agricultural production and the new requirements for development is huge, the Vietnamese government is facing the pressure to reform the sector towards sustainable development accompanied by greater benefits to farmers.
In other words, we need a strong push, even a new revolution, in agricultural production. We need institutional reforms and big changes in the way business is done. Enterprises (with farmers) have to take centre stage and embark on hi-tech agriculture. Only then can agricultural production be connected strongly to all stakeholders, all stages of the value chain, and attach comparative advantages to economies of scale and market, ensure product quality and thereby creating high added value.
In March this year, the Government issued Resolution 30/NQ-CP which raised the credit package for hi-tech agriculture from VNĐ60 trillion to VNĐ100 trillion (US$4.4 billion), unprecedented in the history of the agriculture sector.
This is nearly half as much the stimulus package the Government launched to curb the economic recession in 2009, worth $9 billion.
After the Government’s decision, five to six banks have committed to disbursing a total of VNĐ120 trillion for hi-tech farming, with Agribank ready to lend VNĐ50 trillion. Other big lenders include Vietcombank, Vietinbank and LienVietPostBank. About VNĐ30-40 trillion have been disbursed so far.
In recent years, many businesses, including large corporations and financial institutions (banks and investment funds), have been investing in hi-tech agriculture, including VinGroup, Vinamilk, Hòa Phát Group and Masan Group.
It is worth noting that hi-tech agriculture must be based on market signals, reflecting both new demands and requirements that are appealing to businesses and investors.
Hi-tech agriculture is the cornerstone to satisfy new demand of consumers for ‘green,’ standardised and helpful products. Not only products, but the production process must be ‘green’ and meet recognised quality criteria and standards. These are important factors in penetrating both local and international markets, where the middle class is growing rapidly. Hi-tech agriculture is also the solution to minimising negative impacts and adapting better to climate change.
Policy challenges
The role of the State in reforming the agriculture sector is not small: eliminating institutional barriers, overcoming ‘market failures’, minimising business risks (often high in agriculture) and limiting unfair distribution of benefits.
The most important thing is how to execute this role appropriately and effectively. Below are some points that need attention.
One is the risk of herd investing which may lead to impractical and unsustainable investment in hi-tech agriculture. Businesses may take advantage of this ‘movement’ to abuse policy and distort the market (which should be an effective mechanism). Farmers may not fully benefit from supportive policies. Therefore, the Government should avoid imposition of policy.
Second is the compliance of domestic policy with the country’s commitments to international trade accords, in areas such as State support for research and development (R&D), information dissemination, trade promotion, training and infrastructure development. The important thing is to ensure transparency and enhance the voice of farming businesses.
Third is the credit support policy for hi-tech agriculture. This is a crucial issue with two big concerns; the definition of hi-tech agriculture and how to build an effective and practical credit policy.
According to the Ministry of Agriculture and Rural Development (MARD)’s Department of Science, Technology and Environment, hi-tech agriculture signifies application of new technologies in production, including automation, mechanisation, IT, new materials technology, biotechnology, livestock breeds that provide high yield and quality, and sustainable development on the basis of organic farming.
At present, only 26 enterprises in the sector have been recognised by MARD as hi-tech businesses.
To have an effective credit policy, it is necessary to recognise that hi-tech agriculture contains certain risks and uncertainties, especially in the ‘experimental’ stage.
Therefore, credit support (through lower interest rates) should be considered a risk-sharing mechanism.
Along with enhancing policy capacity and autonomy of the State Bank of Việt Nam (SBV), improving monetary policy and ensuring soundness of the commercial banking system, credit support should come from the State budget.
At the first stage, we can use monetary instruments of the SBV.
It is also necessary to perfect an insurance mechanism for agricultural production. We already have regulations on this issue but the implementation has not been extensive and effective. This will be one of the key factors in businesses and farmers sharing risks.
Fourth is the model of agricultural production in general and hi-tech agriculture in particular. Given the variety of the models, they must meet three basic requirements: economies of scale (thereby better absorbing capital and technology); linkage to value chains; and ensuring bargaining power of farmers.
In fact, there are models of farms, contracts with companies (training for farmers to produce while the company executes marketing and distribution), new co-operatives with farmers contributing capital.
Hi-tech agriculture is thus a big topic which is not just a matter of profits and losses, but restructuring of the sector as a whole. Therefore, there is a need for in-depth studies on ‘market and business leadership’, ‘State support’ and ‘stakeholders’ interests, particularly that of farmers. Besides this, the quality of agricultural growth and sustainable development of the rural sector have to be considered.
Source: VNS. Date: 2017-08-02
Ho Chi Minh seeks to trace pork origins
Starting yesterday, only pork with traceable origins is ostensibly allowed to enter HCM City’s two wholesale markets, but inspections by authorities found that only around 13 per cent of the pork in the markets actually had clear origins, according to the Department of Industry and Trade.
The department in collaboration with other agencies and the managements of Hóc Môn and Bình Điền markets checked the pork that was entering them.
Nguyễn Ngọc Hòa, deputy director of the department, said on July 30 night and July 31 morning, for instance, some 8,400 pig carcasses were brought in, but only 1,205 had traceable origins.
He said that 35 per cent had information entered in their rings by farmers, but the rate falls to 21 per cent when they leave slaughterhouses following lapses by veterinary staff, and falls further to 13 per cent when they reach the two wholesale markets.
The city’s programme to trace the origin of pork involves four locations – farms, abattoirs, wholesale distributors, and retailers.
It has a connected information system, and if any part of the chain does not record information, consumers cannot check the origin of the meat, Hòa explained.
Around 85 per cent of the pork consumed in the city market is supplied from other cities and provinces, and the city is the only locality in the country to have such a programme.
So the city can only request authorities in other provinces to help in this regard, he said.
To improve the situation, relevant city agencies should co-operate with their counterparts in other provinces to persuade pig farmers to record information about pigs and instruct abattoirs and traders to accept only pigs with clear origins, he said.
The department has called on the city government to take a tougher line with violators.
Hòa said pork sold through modern trade channels is properly regulated. Thus, if the portion sold through traditional retail channels -- which get their pork from the two wholesale markets -- is also tightly controlled, all the pork sold in the city would have traceable origins, he said.
Source: VNS. Date: 2017-08-02